In the past year, Lockton has seen an increase in the frequency of complex or high value Professional Indemnity Insurance (PII) claims against solicitors in the UK. This has resulted in persistent large losses – typically defined as a claims payment in excess of £1m, net of the cost of defending the claim or internal management time.
The severity of the claims has also increased, with approximately 20% of claims now pleading losses above £3m. Layers of insurance in excess of a primary of £3m are frequently becoming ‘working layers’.
Below, we explore at some of the key claims trends in 2025:
1. Commercial property claims continue to rise
Commercial property work now accounts for approximately 30% of all notifications (circumstances & claims), and half of all damages payments. Residential property work remains the largest source of claims and delivers the majority of notifications containing allegations of fraud. Fee earners in this area of practice often work on a fixed fee basis and use precedents. Where these contain errors, it can often lead to notifications containing multiple properties – a hornet’s nest type notification. This could partially explain why notifications are higher in this practice area. We are also still seeing frequent multiple dwellings relief, buyer-funded developments, and failure of Know Your Client protocol notifications.
The Law Society’s introduction of a new code for signing and exchange property contracts (opens a new window) aims to remove the uncertainty around completing property transactions using new technology. It remains to be seen whether the code, in its final form, can deliver both certainty and efficiency.
2. Wills and probate litigation is increasing
The frequency of contentious wills, trust, and probate claims continues to increase. Probate litigation is becoming more common, the result of inflation-driven high asset values and the growing prevalence of complex family matrices. We are also seeing more challenges in relation to coercion, undue influence, and lack of financial provision.
Claims often take focus at the solicitor, or advising solicitor, who prepared the will or lasting power of attorney in question. It is also an area where fee earners are alleged to have advised outside their scope of expertise. The most frequent cases involve retainer management, including a lack of clarity of instructions and drafting errors in wills. The remaining areas of work – inheritance claims, investment management, Court of Protection work, and asset realisation – generate relatively fewer claims in comparison.
Predictably, claims where a breach of duty is clear, and causative of loss, typically result in a quick settlement. Less clear matters can be extremely costly to defend, however. Tax errors generate the highest value claims on average.
3. Concerns remain over the Building Safety Act 2022
Over the last 18 months, Lockton has consulted with the Ministry of Housing, Communities and Local Government on behalf of clients across the legal and construction sectors in relation to the Building Safety Act (BSA) 2022. The BSA 2022 introduced additional protections for certain leaseholders from liability for cladding- and fire-related remediation works. The costs of these works can be harmful to a leaseholder, and lenders have been reluctant to lend against properties without assurances that the protections in BSA 2022 apply to the lease in question.
What is clear, is that there is an unsurprising lack of appetite among solicitors to undertake transactions in relation the BSA 2022. The question of whether a lease qualifies for these protections depends, to a significant extent, on matters which may well be outside the knowledge of a buyer at the time of purchase, and difficult for the solicitor to verify. Solicitors therefore have significant concerns when it comes to the obligations that the BSA 2022 attempts to impose upon them, with many firms deciding not to take on BSA-related matters whatsoever.
This is an extremely complex piece of legislation, and an area in which solicitors need absolute clarity as to what they can, and cannot, advise on. Regardless, we do expect claims to arise in relation to the BSA-2022 in the coming year.
4. Pensions claims may follow Virgin Media judgement
In July 2024, the Court of Appeal judged in Virgin Media v NTL Pension Trustees II that amendments made to defined benefit pension scheme trust deeds and rules that affected contracted-out rights will be void if the scheme did not, at the time of amendment, obtain a Section 37 Confirmation.
If the decision is not appealed to the Supreme Court,it may impose a burden on schemes, as trustees may be advised to look back through archival files to verify if they obtained the relevant Section 37 Confirmation. This has potentially wide-ranging consequences and will be an issue if trustees cannot find the confirmation, or clear evidence it was obtained.
A joint statement has been issued by the Society of Pension Professionals, the Association of Consulting Actuaries and the Association of Pension Lawyers confirming that they have made a proposal to the Department for Work and Pensions (DWP) that it introduces regulations to allow retrospective validation of amendments affected by the decision. We are not aware of a time frame for a response.
We are anticipating a frequency of notifications arising from the Court of Appeal judgment as firms review their relevant portfolios and advice.
5. Evolving cyber attacks
Cyber-crime is not a new area for firms, but the methods employed by fraudsters to carry out attacks continue to evolve. According to the most recent Cyber Breaches Survey (opens a new window), half of all UK businesses experienced a cyber-attack in 2024.
If a firm does suffer a cyber-attack, this should be notified to the Information Commissioner’s Office (ICO), Solicitors Regulation Authority (SRA), and to the client. This is an obligation where there has been a serious breach of SRA Standards and Regulations (opens a new window), but firms are encouraged to report attacks even if they haven’t been successful, or if no clients have been impacted.
Cover for cyber breaches is provided under the SRA’s Minimum Terms and Conditions Insurance policy (PII) for claims by third parties. However, first-party losses to the firm itself are not covered under the policy.
6. Regulatory investigations
The SRA continues to be active in investigating anti-money laundering, client due diligence and the SRA Accounts Rules (opens a new window), all of which is producing a larger number of claims. This has been more noticeable since the increase to the SRA’s fining powers, which came into effect (opens a new window) in July 2022. From that date, the maximum fine the SRA can impose for solicitors, traditional firms (recognised bodies or recognised sole practices) and the individuals who work in them is £25,000.
Firms should note that the Minimum Terms and Conditions Insurance policy does not provide insurance cover for regulatory investigations, so this remains an area of potential exposure.
Mitigating your claims risk
Proactively managing risk is crucial to help your firm to minimise potential liabilities and avoid claims, while safeguarding your client relationships and reputation. Mitigating risk effectively can also help you to secure more favourable insurance policy terms and reduced premiums.
Key actions for firms include:
Foster a culture of risk management – A firm’s culture shapes how lawyers and staff approach ethical decision-making, client relationships, and compliance, ultimately reducing the risk of claims. Senior partners should model ethical behaviour and emphasise adherence to legal/regulatory obligations. Meanwhile, employees should be encouraged to report issues when they occur, and to ask for help where needed – particularly for complex and high-risk matters. Encouraging post-case reviews can also help to identify lessons learned and continuously improve risk management.
Be honest about risk – when handling clients, firms should be upfront about case risks, potential outcomes, and billing structures. Engagement letters provide an opportunity to clearly define scope, fees, and responsibilities in writing before starting work. Firms should also take written records of all legal advice, agreements, and key client interactions.
Manage client expectations – by prioritising transparency with clients, firms can avoid dissatisfaction, strengthen working relationships and avoid potential claims. This requires an initiative-taking approach to client management, comprised of regular check-ins, clear communication, and responsiveness.
Encourage training and continuous learning – firms should provide regular training on ethics, risk management, and compliance, with regular updates to the curriculum to keep up to date with evolving risks. Communicate to staff that internal risk management measures are not there to be cumbersome; they exist to prevent fee-earners and the wider firm from suffering claims.
Promote cybersecurity awareness – firms should actively promote the importance of cyber awareness among staff. Implementing mandatory phishing awareness courses, strong passwords, and other protocols can help to create a culture in which employees tree client data with the highest level of confidentiality.
Want to discuss?
To discuss any of the trends noted above, reach out to a member of our team.
For further information, including more legal sector news and insights, visit our Solicitors (opens a new window) page.
